How the ACA Impacts Seasonal Industries
Do you have to cover health insurance for seasonal employees at your business? What even defines a "seasonal employee"? Here's a look at how the ACA impacts seasonal industries and what steps HR leaders can take to stay in compliance.
Understanding the ACA and Seasonal Employees
The ACA contains provisions that require employers with a certain number of workers to provide healthcare plans. According to the IRS, if you have 50 or more employees who are full-time (defined as working 30 hours or more) or full-time equivalents in the prior year, then you're an applicable large employer (ALE) and must offer health insurance or be subject to a penalty. However, seasonal employees and seasonal workers can complicate the picture. HR leaders must have clear strategies in place for determining worker classification as well as understanding how seasonal employees and seasonal workers add to their overall organizational standing and headcount.
5 Factors Seasonal Industries Should Consider
1. Understand the definition of a seasonal employee
According to the IRS, a seasonal employee is one who is typically hired for six months or fewer each year and who has a job that starts and finishes at the same time each year. For example, if a tax preparation firm typically hires staff accountants in January and employs them until May, they would fall under this qualification.
2. Learn the distinction between a seasonal worker and a seasonal employee
For purposes of the ACA, there's another class of staff called seasonal workers. A seasonal worker is someone who performs labor or services on a seasonal basis, as defined by the Department of Labor, and retail workers employed exclusively during holiday seasons. For this purpose, employers may apply a reasonable, good faith interpretation of the term "seasonal worker" and a reasonable, good faith interpretation of the Department of Labor's definition of seasonal worker.
3. Focus on employer classification
While the distinctions may seem complicated, correctly classifying employees is the first step to staying in compliance with the ACA. A misclassification can lead to expensive penalties and other challenges, according to the IRS.
4. Determine your ALE status
Seasonal workers can influence whether you qualify as an ALE during a given year. If the workforce is 50 or more full-time and full-time equivalent employees for 120 days or fewer during the prior year and all employees in excess of 50 employed during that period of no more than 120 days are seasonal workers, your firm is not considered an applicable large employer, the IRS reports.
5. Consider a compliance management solution
Every business that employs seasonal employees and workers should consider using a compliance management system that can help them understand how changing regulations impact their business. Your firm can develop a compliance and hiring strategy that aligns your business needs with the broader health care context.
The ACA impacts seasonal industries in unexpected ways, adding a layer of complexity to compliance and hiring. HR leaders should evaluate their needs and work with knowledgeable partners to help develop a roadmap that fits their unique needs.